Can You Pay a Credit Card With a Credit Card?

Credit card debt in the U.S. reached a record $1.14 trillion in the second quarter of 2024. Could anyone pay it all off using a giant Visa or Discover card?

No.

Not even Elon Musk can get a credit card with a $1.15 trillion credit limit. And whether you’re a billionaire or just scraping by, you cannot use one credit card to pay off another one.

That can be a tempting thought, but the card companies generally don’t allow it. There are alternatives, however.

You can get a new credit card and transfer balances from old cards. You can also get a cash advance on your existing credit card.

Both are essentially the same as using one credit card to pay another. The hitch, of course, is that you wouldn’t have actually paid anything off. You would have merely shifted your debt and bought more time to pay it off.

That’s not necessarily a bad thing, but it has risks. Here’s what you consider before doing anything.

How Credit Card Payments Work

Anytime you pay for something using a credit card, the cost is added to all the other purchases you’ve made. The total of everything is known as the “balance,” though there’s more to it than that.

The balance also includes fees, any late charges you have and – here’s the big one – the interest charged on what you owe.

Credit card companies use an average daily balance method to determine your interest charge. Your interest is compounded and accumulates every day, based on a daily rate.

If that sounds complicated, it is. But say you have a 17% interest rate. The rate per day would be .17/365 (for the number of days in a year). Your per-day rate would be 0.000466%.

If you have a balance of $10,000 on the first day of your billing cycle, it will increase to $10,004.66 the next day. One day later, it would jump to $10,009.32.

It adds up fast, especially since the average credit card interest rate was pushing 21% in August of 2024. In a perfect financial world, you could pay off the balance every month and never be assessed any interest charges.

Few people live in that world, but they can make the monthly minimum payment to avoid late fees and damage to their credit rating. The average minimum payment is usually 1%-4% of the balance.

The rest of your spending rolls over into next month’s bill. When you carry a balance, most issuers charge you interest from the billing date until the time they receive your payment.

That part can be confusing, but the process of paying your bill isn’t that complicated. You can send in a check, pay by phone, pay online at your issuer’s website, or set up automated payments that are withdrawn automatically from your bank account.

Is it Possible to Pay a Credit Card with Another Credit Card?

You can’t directly use your Visa card to pay off your American Express card, or any other combination of cards.

The key word there is “directly.”

Credit issuers don’t allow you to use a credit card to make your monthly payment, but there are ways around that if you really want to use credit.

You can transfer your balance to a new card, or you can get a cash advance. Both methods come with pros and cons.

Balance Transfers

A balance transfer is when you move all or part of your balance from one card to a new one. The new card typically has a 0% interest rate for an introductory period, so you’ll get a temporary breather from paying interest.

Balance transfers are an attractive strategy, but they have catches. Issuers typically charge a transfer fee of 1%-5%. So, if you’re moving $5,000 to a card with a 4% transfer fee, it’ll cost you $200 off the top.

The introductory period usually lasts 12-18 months, though that varies. Whenever it ends, you’ll go from paying nothing in interest one month to more than 20% the next.

If you haven’t paid off your balance, or at least a big chunk of your initial transfer, you’ll be back where you started. That means you’re probably at risk of missing payments, which will damage your credit score.

Cash Advance

A cash advance is when you borrow money from your credit card’s line of credit. You can do it at an ATM or bank. Instead of charging something like groceries or a new set of golf clubs on your card, you are basically charging an amount of money.

A cash advance is a viable option if you’re in a pinch. But like balance transfers, there are potential pitfalls that you should consider first.

Cash advances usually have higher interest rates than other purchases. And, unlike balance transfers, there is no grace period in which no interest is charged.

Risks and Considerations

Transferring a balance to a new card or getting a cash advance can be financial lifelines, but don’t rush to grab one. You need a clear picture of your financial goals, your spending habits and whether you can avoid the risks.

What risks?

High interest rates, which kick in at the end of the interest-free introductory period of a balance transfer. Transfer fees, which can be more than what you will save by transferring the money.

There is also a spate of other fees. Crunch all those numbers and come up with a repayment plan. If poor spending habits got you in the hole, you need to commit yourself to following a budget.

If you can’t do that, you may well start missing payments, which will damage your credit score. So be careful, or that lifeline could turn into an anchor.

Alternatives to Using a Credit Card to Pay Off Another Credit Card

Using a balance transfer or cash advance to pay off a credit card makes sense in some circumstances. But if you’re looking to erase a credit card balance, there are other options.

Debt consolidation loans can simplify payments and lower interest payments. Personal loans or equity loans that use your house as collateral are also worth considering. The most important thing is to find the right strategy for your situation.

Debt Consolidation Loans

Debt consolidation is when you get a loan to lump multiple debts together and pay them off with one monthly payment. The single payment should be lower than what you would have been paying.

That’s because all those debts had higher interest rates than what you’ll get with the debt consolidation loan. If you can’t get a money-saving rate, don’t pursue the loan.

By consolidating all those varying debts, you’ll also simplify your life. It’s easier to make one payment than three or four or even more. And unlike credit cards and other debts, the interest rate on a loan is fixed. You’ll pay the same amount every month instead of being at the whim of the Federal Reserve Board.

Lending institutions aren’t just going to hand you the money, of course. You’ll need to qualify, which means they’ll check your financial history and credit score. The higher your score, the lower the interest rate you will qualify for.

Personal Loans

Getting a personal loan to pay off credit card debt is similar to getting a debt consolidation loan. You borrow a lump sum and pay off your balances on your cards.

The difference is you don’t necessarily have to roll all the balances together. You could still pay them off individually each month, but why would you?

The whole point is to get out from under high interest rates. You’ll do that by immediately paying off your credit cards with the loan, which should have a lower interest rate. Then, as with the debt consolidation loan, you make one monthly payment on the personal loan.

Personal loans are available at banks, credit unions and online lending companies. There also are payday lenders, though use them only as a last resort since they typically have exorbitant interest rates (399%!) and punitive repayment requirements.

If you’re lucky, you might have a friend or relative who’ll loan you money. If you’re really lucky, they might not even charge you interest.

Lending institutions will charge interest, which raises another issue. Should you get a secured or unsecured loan?

A secured loan is backed by collateral. You put up something you own, which the lender can seize if you default on the loan. An unsecured loan doesn’t require any collateral.

Since the lender has less risk with a secured loan, they have lower interest rates and easier repayment terms than unsecured loans. If you’re confident you can make the monthly payments, a secured loan is the way to go.

Home Equity Loans or Lines of Credit

When it comes to secured loans, there’s nothing like a home equity loan. Your house is the collateral,

A home equity loan is often referred to as a second mortgage. You borrow against the equity in your home.

For instance, if your home is valued at $400,000 and your mortgage balance is $250,000, you have $150,000 in equity. You borrow against that, though banks typically allow you to borrow only up to 80% of your equity amount.

With a Home Equity Line of Credit (HELOC), you receive a line of credit based on your home’s equity. You pay interest only on the amount of credit you use.

HELOCs and home equity loans generally have much lower interest rates than credit cards, which is the big plus. The big minus is that your house will be foreclosed if you default on your credit card bill.

Credit Counseling Service

If you’re considering paying off a credit card with another credit card, chances are you might not have your financial act together. That’s where credit counseling comes in.

A counselor can analyze your spending habits, help devise a budget and mentor you on habits that will get you and keep you out of debt. They can also set up programs, like debt management plans, which could save you money while paying off your debt.

Credit counselors work for nonprofit organizations like InCharge Debt Solutions. To ensure the company is reputable, see if it is affiliated with the National Foundation for Credit Counseling (NFCC) or the Financial Counseling Association of America (FCAA).

You can also check with your state’s Attorney General’s office and the Better Business Bureau to see if the company has had complaints filed against it.

Managing Credit Card Debt

Credit card debt is often like being stuck in quicksand. The more you struggle to escape, the deeper you get.

That doesn’t have to be the case if you have a plan to get out. Among the things you should do:

• Pay your bills on time. Late fees add up fast and damage your credit score, so you should at least make the minimum payments on your credit cards.
• Make more than the minimum payment.
• Create a budget.
• Stick to that budget. Live within your means.
• Make sure you have an emergency fund. That might keep you from having to charge for a new refrigerator if your old one conks out.
• Roll your high-interest debts into one that has a lower overall interest rate using a debt consolidation program.

Choosing the Right Path

Credit card balances in the U.S. grew $27 billion in just the first three months of 2024, and that number is expected to keep climbing. You don’t want to contribute to that rise.

Transferring credit card debt to a new card or getting a cash advance are popular options in the battle against debt, but they’re not right for everyone.

You must make sure the rewards outweigh the risks. That goes for other strategies, too, like debt management plans, debt settlement and any debt consolidation program.

Before you decide, familiarize yourself with every option. Don’t be afraid to seek advice from credit counselors. That’s what they’re there for.